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Buffett Rule Fails in Senate

Even though it’s crunch time for tax season, it’s worth it to mention that the Buffett rule vote failed today in the Democrat-led Senate.

Interestingly, in Reuter’s coverage, it mentions that the vote ” failed to garner the 60 votes needed in the 100-member Senate to move to a full debate and vote on the bill aimed at getting more tax revenues out of the wealthy. However, I had to read through the article twice to find the actual vote tally. Reuter’s spelled out some of the number words, making it difficult to readily see just how little support the measure had:

“The wealthiest one percent takes home the highest share of the nation’s income since the early ’20s, the roaring ’20s. Times are tough for many middle class American families. Millionaires and billionaires aren’t sharing the pain or the sacrifice, not one bit. Last year there were 7,000 millionaires who didn’t pay a single penny in federal income taxes.”

Republican Sen. Jon Kyl said in response,

“You’ve got the top 10 percent of taxpayers paying 70 percent of all the taxes, earning 45 percent of the income. Those are certainly the wealthy, and they’re certainly paying a big share. How about less wealthy? The bottom 95 percent — in other words, everybody but the top 5 percent — pays 41.3 percent of income taxes, earns 65 percent of the money, of the income. Is this fair? The Joint Committee on Taxation estimates that 51 percent of all households, which includes both filers and nonfilers, had either zero or negative income tax liability in 2009. People who do not share in the sacrifice of paying taxes have little direct incentive to care whether the government is spending and taxing too much. Maybe that’s why the president has no problem with even more Americans getting a free ride.”

What I find most interesting, however, is that while everyone explains that the Buffett rule seeks to ensure that Americans who make more than $1 million pay 30% in taxes no matter the source of income, generally two crucial things are missing in the discussion.

1) The actual name of the “Buffet Rule” bill is the “Paying a Fair Share Act”. According to the Library of Congress,

The “Paying a Fair Share Act,” introduced by Rhode Island Democrat Sheldon Whitehouse, would apply to anyone whose adjustable gross income exceeds $1 million. Those who itemize their deductions would get a credit equal to the value of their charitable contribution deductions, so as not to discourage charitable giving. To measure whether a millionaire is paying at least 30% of his income in taxes, the bill would take into account what the individual paid in federal income and payroll taxes plus the new 3.8 Medicare surtax set to take effect in 2013.The minimum effective tax rate would be phased in for those with incomes between $1 million and $2 million.

2) The mandated 30% rule is a direct attack and typical government lie-speak to undo capital gains and qualified dividends rate, both of which are currently 15%. As a tax advisor to higher income earners, no one generally pays under 30%, unless the majority of their income is from long term capital gains and/or qualified dividends. Obama probably figures that most people do not/will not realize this, which is why it is never mentioned by him or the press.

So, there you have it. At least for the time being, this odious bill, the Buffett Rule, cannot advance even past the Dems. It will be worthwhile to keep an eye on it during the election season to see how it is used to foment class warfare between the haves- and have-nots.